Zoscales Partners follow-on investment into Pioneer Diagnostics Center

Zoscales Partners has secured a follow-on investment into Pioneer Diagnostics Center (PDC), a diagnostic imaging service provider in Ethiopia, buying a controlling stake in the company. Zoscales originally backed PDC in May 2020 as their fifth portfolio company in their maiden fund.

With this investment, Zoscales will inject additional capital to help PDC expand its presence in Ethiopia by scaling up beyond Addis Ababa. PDC is the largest private sector healthcare diagnostics service provider in Ethiopia, offering imaging services including MRI, CT, and Ultrasound, among others. The company, which was established in 2006, pioneered the first diagnostic imaging business providing MRI services in Ethiopia.

“PDC’s performance during the pandemic has been quite robust, affirming our thesis that healthcare investments in East Africa are often resilient to significant shocks”, says Fredd Kambo, the Principal who led the deal for Zoscales. He went on to add “We are excited to re-commit to the company’s ambitious and high performing founder, Brook Fekadu. This follow-on investment will enable PDC to scale beyond Addis and will further enable the company to offer more specialised services, thereby catalysing the provision of high quality, affordable care in Ethiopia.”

According to Mr Kambo, the investment in PDC is a key step in building a regional network of healthcare assets, and this is just the beginning. The East African private equity firm is currently in advanced discussions to invest in other companies in Ethiopia and Kenya.

CGF CROWN CORK IS A TOP TAXPAYER IN ETHIOPIA

Zoscales’ first investment, CGF Crown Cork Manufacturing, was recently listed among the 200 top taxpayers in Ethiopia.

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In September 2020, CGF Crown Cork was honored as one of the top 200 most loyal companies and highest taxpayers in Ethiopia by the Ethiopian Ministry of Revenue.

With a production capacity of 8 million crown cork caps per day, CGF Crown Cork Manufacturing is the leading packaging supplier for the beverage industry in Ethiopia. The company was established by Mr. Girmay Ferede in 2004 and as of June 2020, has a total workforce of 77 people. The majority of CGF’s buyers are multinationals operating in the beverage market in Ethiopia such as Coca Cola, Pepsi, and Heineken. Zoscales Partners invested in CGF Crown Cork in 2018 and holds a significant minority share in the company.

ZOSCALES DONATES 1,000 TABLETS FOR COVID-19 CONTACT TRACING IN ETHIOPIA

Zoscales has helped raise over USD 100k for the Ethiopian Public Health Institute (EPHI) to purchase 4G-enabled tablets for the surveillance and contact tracing of COVID-19 cases

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“We always ask ourselves what we can do in situations like this. Similar to our core work of investing, we try to find a value-add, and supporting the EPHI with technology and smart solutions was a value-add to their national COVID-19 response plan.”

— Ashenafi Alemu, Managing Partner

Since it was first identified in the People’s Republic of China in January 2020, the COVID-19 virus has spread rapidly across the globe and caused an unprecedented shock to the global community. Healthcare systems around the globe are being put to the test and struggling to cope with the novel virus as the current pandemic poses a variety of new challenges to healthcare facilities and professionals. The challenges are even more pronounced in developing countries where healthcare systems are weak, equipped with poor infrastructure, and have limited resources.

In March 2020, the Government of Ethiopia initiated a prevention and mitigation plan to limit the spread and adverse impact of the virus on the Ethiopian society. A core pillar of the plan is surveillance, reporting and contact tracing of COVID-19 incidents in order to prevent widespread community transmission.

As indicated in the plan, one of the major challenges related to surveillance was a poor and unlinked surveillance reporting system from lower to higher level. An integrated surveillance system is key in delivering accurate and timely information so policy makers can act on it quickly and effectively. Therefore, Zoscales – along with other private sector players – helped raise more than USD 100k to donate 1,000 4g-enabled tablets to support the so-called Rapid Response Teams (RRTs) in their information exchange task by enabling an end-to-end automation of the COVID-19 surveillance system. 

The donation was initiated by Zoscales and organized in collaboration with Minaye Group, Verdant Frontiers, Gateway Delta, 54 Capital, Fairfax Africa, BDO, Raxio, Roha Ventures, Tulu Moye Geothermal, Mesfine Tafesse & Associates, Grant Thornton and TRC.

As a token of this donation, the Ethiopian Public Health Institute (EPHI) organized a certificate award ceremony on 17 September 2020.

Managing Partner Ashenafi Alemu and Aschalew Abayneh, Deputy Director of EPHI at the certificate award ceremony, 17 September 2020.

Zoscales wins sustainability award

Capital Finance International (CFI.co) has awarded Zoscales Partners with a prize for Best Sustainable Investment Strategy East Africa 2020. CFI.co explains why they chose Zoscales Partners as recipients of the award:

“Zoscales Partners, based in Addis Ababa, has crafted win-win solutions with its impact investment. It launched a $75m fund three years ago which has since created some 300 jobs in East Africa. A second fund is expected for 2020, and the firm anticipated another 800 jobs will be created. The private equity manager ensures profit-seeking never comes at the expense of positive outcomes for society.”

Founding partners of Zoscales, Ashenafi Alemu and Jacop Rentschler are proud to receive this international recognition.

“It is always great to get recognition for our work, but we are especially proud of this award as it recognizes our sustainable strategy. Furthermore, we were voted best sustainable strategy among all asset classes in East Africa, not just private equity,” says Jacop Rentschler.

CFI.co also recognizes the growth potential of East Africa in their statement.

“East Africa offers the convergence of healthy economies and a wealth of skilled workers, and strong corporate governance ensures investor protection. Fair taxation schemes support FDI, and the Zoscales portfolio includes the consumer goods, healthcare and materials sectors. The firm focuses on these core industries for their growth potential (projected at over 15 percent CAGR) and promising exit paths: trade sales and secondary buyouts.”

Each year, CFI.co seeks out individuals and organizations that contribute significantly to the convergence of economies and truly add value for all stakeholders. You can read more about the Zoscales award on the CFI.co website here.

In December 2019, Zoscales received an award as the Best East African Fund Manager of the Year by SuperReturn, a contest that recognizes private capital fund managers across several categories.

Zoscales makes its first move into the healthcare market

Zoscales has made an investment into Pioneer Diagnostics Center (PDC), a diagnostic imaging service provider in Ethiopia.

Fredd Kambo, the Principal who led the deal for the East African private equity firm said:

“Ethiopia currently has the lowest penetration of diagnostic imaging capacity per capita in East Africa. The demand for diagnostic services is growing due to the increasing population, health consciousness, life expectancy rates and incidents of non-communicable diseases like heart disease, stroke, cancer, and diabetes. The COVID-19 pandemic further demonstrates the need for investment in healthcare, and it is of vital importance that the private sector plays its part in provision of services.”

PDC has shown solid growth over the past few years and Zoscales is excited to build on its strong market position. The demand for healthcare services is high in Ethiopia and there is a need for additional capacity and therefore strong potential for growth.

“We are partnering with a leader in the sector in Ethiopia, PDC founder and CEO Brook Fekadu, to increase capacity and capture the growth opportunities in the market. Brook was the first to introduce an MRI to the private sector in Ethiopia and has led the company in its growth over the recent years,” says Jacop Rentschler, Managing Partner at Zoscales.

With the investment in PDC, Zoscales is moving closer to their goal of investing in the under-served healthcare sector in East Africa, supporting the SDG 3.

"The state-of-the-art equipment and software that we will acquire due to the investment from Zoscales Partners will significantly improve the quality of images and reports we produce. In addition, we expect an increase in the number of patients that have access to our imaging services and the ability to conduct new investigations that we currently cannot perform. Our patients will be able to get the same standard of services they would expect from imaging centers in Europe and North America," commented the company’s founder and CEO, Brook Fekadu.

Facts about Zoscales

Zoscales Partners is an investment firm, investing in private equity with impact in East Africa. They launched their first USD 75m private equity fund, Zoscales Fund I, in August 2017 and have deployed 60% of the capital in the fund, totaling 5 investments. Zoscales was recently awarded “Best East African PE fund 2019” by SuperReturn, and “Best Sustainable Investment Strategy in East Africa 2020” by Capital Finance International.

Facts about Pioneer Diagnostics Center (PDC)

Pioneer Diagnostics Center (PDC) was established in 2006 and is a forerunner in quality imaging diagnostic services in Ethiopia mainly MRIs, CT scans, X-Rays and Ultrasounds. PDC was the first company to bring a privately owned MRI to Ethiopia.

For this transaction, Zoscales received advisory services from law firms Mesfin Tafesse & Associates and BLC Robert & Associates, and financial advisory from BDO.

Zoscales Partners voted “East African Fund Manager of the Year”

Zoscales Partners’ (“Zoscales”) investment team attended the SuperReturn Africa Conference in Cape Town in December 2019.

In the days leading to the conference, Zoscales was nominated for the “SuperReturn Africa GP Awards”, a contest that recognizes private capital fund managers across several categories. At the conferences award ceremony held on December 3rd, Zoscales was voted Best East African Fund Manager to the delight of the representative team. “We were honoured to be nominated for this award in the first place and, frankly speaking, we were pleasantly surprised to have won the Best East African Fund Manager category,” said Jacop Rentschler.

Zoscales reached out to one of the judges on the panel, Ziad H. Sarkis, to understand what helped Zoscales stand out amongst its peers.  Ziad is a Private Capital Fund expert and the Director of Research at the Joshua J. Harris Alternative Investments Program at the renowned Wharton School of Business in Philadelphia, Pennsylvania. His work includes tracking LPs and GPs and private capital fund investment trends globally, particularly in emerging markets. Here is what Ziad Sarkis shared with us: “Zoscales is one of the few private capital players who understand and actively operate in East African markets. They have a unique team with the right mix of talent and backgrounds to operate effectively in the region, particularly in tackling frontier countries such as Ethiopia. I categorize Zoscales Partners as an Emerging Manager to watch over the coming years, particularly for allocators seeking exposure to a growing Ethiopian economy, amongst other factors”.

Co-Founders and Managing Partners Ashenafi Alemu and Jacop Rentschler were invited as panelists to various on-stage debates. One of the panels was “Silent Giants on the Rise”, which addressed the investment potential in Rwanda, Ghana, Ivory Coast, Senegal, and Ethiopia. Another panel was “Unlocked Potential”, which discussed key drivers of economic growth in frontier markets. To Ashenafi and Jacop, the SuperReturn Africa conference is an important forum to discuss investment trends and challenges in Africa: “We always look forward to participating in the SuperReturn Africa conference. It gathers the largest investors globally but also the most successful investment funds. This is an excellent platform for networking but also for learning and sharing experiences,” said Jacop Rentschler.

What is SuperReturn Africa?

The SuperReturn Africa Conference is the largest private equity and venture capital event in Africa. In December 2019, the event was joined by 500+ decision-makers and brought together 200+ General Partners and 130+ Limited Partners in the private equity industry.

Zoscales Co-Founders and Managing Partners Jacop Rentschler (Left) and Ashenafi Alemu (Right) holding the “SuperReturn Africa East African Fund Manager of the Year” Award.

Zoscales Partners Makes Another Investment In Zoscales Fund I

Zoscales Partners (ZP) maiden fund (“Zoscales Fund I”) is pleased to announce its investment into Ahadukes Food Products S.C. (Ahadukes). Ahadukes produces mainstream and premium biscuits for the Ethiopian domestic and export markets. The demand-supply gap is continuously growing in Ethiopia as a result of a rapidly growing young population. Ahadukes Food Products S.C. was founded in Ethiopia by Ahadu PLC, a leading local company with interests across several industries. In 2013, Vasari Global, a UK based investment group, joined Ahadukes. Ahadukes has created numerous job opportunities as well as quality local products at reasonable prices.

ZP will partner with management and current shareholders to drive scale initiatives and help the company become East Africa’s leading biscuit producer.

“Besides increasing production lines, ZP’s investment will fund milling and silo to stabilize the impact of seasonality of raw materials and manage costs. ZP will also help prepare Ahadukes for exports while improving local distribution. The investment is expected to immediately create up to 150 new jobs for the community. We welcome ZP to this partnership” says Chairman of the Ahadu Group, Solomon Wondimneh.

Ashenafi Alemu, the partner who led the deal for the East African private equity firm said:

“Despite the unmet demand for biscuits and other processed foods, Ethiopia does not have many world-class food production facilities that can bring economies of scale to both production and distribution. Scale will help develop the supply chain of agricultural outputs helping thousands of smallholder farmers. The scaling potential of Ahadukes' state-of-the-art production facility was a very attractive feature for us.”

Alemu elaborates on why ZP chose Ahadukes:

“Our choice of Ahadukes was strongly driven by the quality of the promoters and the firm's capable management team and we look forward to working with them.”

“Ethiopia has been an important area of our global investment strategy and we invested in Ahadukes as a start-up early on. We believe there is huge potential in this market and are very excited to welcome Ashenafi Alemu and his Zoscales team as partners in this exciting venture. We look forward to a mutually beneficial partnership and fully expect Ahadukes to become Ethiopia’s leading biscuit supplier” said Jacques Fragis who led the deal from Vasari’s side.

FACTS ABOUT AHADUKES

The Ethiopian biscuit producer Ahadukes commissioned its first 50 MT/per day production line in May 2015 in the city of Bishoftu. Its range of branded biscuits includes Marie Gold, Ginger Crunch, Tiger Creams, among others already enjoying great market success. Ahadukes has implemented a unique model across its production facility, applied technology, marketing strategy, corporate structure and corporate governance.

FACTS ABOUT AHADU

Ahadu PLC is an Ethiopian conglomerate company that has been in operation for the past 3 decades and mainly engaged in value adding and development-oriented sectors such as manufacturing, agriculture, health care and food processing. Ahadu is the founder and original investor into Ahadukes with a strong track record in all the sectors in which it operates.

FACTS ABOUT VASARI

Vasari is a leading consumer focused investment group with over 3 decades of experience in owning and operating companies across a variety of industries. Vasari focuses on the manufacturing of branded goods across Europe, Asia and Africa.

FACTS ABOUT ZOSCALES PARTNERS

Zoscales Partners is a private equity firm with impact in East Africa. Zoscales launched its first USD 75M private equity fund, Zoscales Fund I, in the beginning of 2017 and has deployed or committed over 50% of the capital in the fund across 4 investments. Zoscales was recently nominated as “East African fund manager of the year” for 2019 by SuperReturn. In 2020, Zoscales will launch its second fund.

Aman Assefa & Associates Law Office, Clifford Chance LLP, Tameru Wondm Agengehu in cooperation with BonnelliEred, Madun Gujadhur Chambers, advised on legal and BDO provided financial advisory services.

Zoscales Backs Recruitment Platform For Fund I’s Third Deal

Zoscales Partners has made the third deal for its maiden private equity fund. The Addis Ababa-based investment rm is backing African Jobs Network (AJN) on behalf of the $75 million Zoscales Fund I with an undisclosed amount of fresh equity, betting on the growing levels of demand for recruitment services in East Africa as the region’s attraction as a destination for foreign direct investment continues to increase. Jacop Rentschler, one of Zoscales’s co-founders and the Managing Partner who led the deal takes a seat on AJN’s board.

According to Zoscales, AJN’s brand reputation and list of clients were important criteria in their decision to invest. The East African recruiting platform positions itself as one of the region’s “talent search” industry leaders. The fresh capital from the investment will be put to work in additional technology development as well as boosting the rm’s planned sales and marketing initiatives.

“This partnership will help us leverage AJN’s proprietary AI-powered recruitment platform, which will provide greater value to recruiters, employers and job seekers across East Africa,” commented the company’s founder and CEO, Yusuf Reja. “Product innovation is a key area of focus for our company and the partnership is critical to our expansion strategy across East Africa.”

AJN joins two other businesses in Zoscales Fund I’s portfolio. They are CGF Crown Cork Manufacturing, a manufacturer of metal crown cork that it supplies to multinationals in the beverage industry and Ethio-Asia, a manufacturer of personal care products in Ethiopia, which produces well-known, branded soap and detergent products. The fund’s strategy is to invest in small and medium-sized businesses in the FMCG and Healthcare sectors, as well as materials and renewable energy businesses. According to Zoscales’ website, these sectors are attractive due to promising CAGRs which are anticipated to exceed 15%, as well as their sell-on attraction to trade buyers and secondary private equity acquirers.

For this transaction, Zoscales received advisory services from law firms Clifford Chance, Mesfin Tafesse & Associates, and Madun Gujadhur Chambers and financial advisory firm Grant Thornton. AJN’s exclusive financial advisors were Swiss-based European Internet Ventures.

Source: Africa Capital Digest, 27 October 2019: https://africacapitaldigest.com/zoscales-backs-recruitment-platform-for-fund-is-third-deal/

Zoscales Makes First Two Deals For Maiden Fund

Last week, Zoscales Partners announced that it has made the first two deals for its maiden fund. The fund, whose primary focus is deals in Ethiopia with satellite investments in the greater East African region, has $75 million in capital which it is looking to invest in small and medium-sized businesses in the FMCG and Healthcare sectors, as well as materials and renewable energy businesses. According to Zoscales’ website, these sectors are attractive due to promising CAGRs which are anticipated to exceed 15%, as well as their sell-on attraction to trade buyers and secondary private equity acquirers. By the end of the first quarter of next year, the investment firm expects to have deployed 45% of its committed capital.

The first of the two transactions announced last week is for CGF Crown Cork Manufacturing, a leading manufacturer of metal crown cork that it supplies to multinationals in the beverage industry. The capital from the investment will be used to help CGF become a diversified packaging solutions provider to the beverage sector in East Africa, further bolstering its market position and helping it take full advantage of the expansions planned by beer and consumer soft drink multinationals in Ethiopia, locking in significant growth.

The second of the two deals is in Ethio-Asia, a manufacturer of personal care products in Ethiopia, which produces well-known, branded soap and detergent products. The capital will be used to expand the firm’s production capacity and foster the firm’s innovation capabilities. In addition, Zoscales will work with the company’s management team to improve Ethio-Asia’s environmental, social and governance standards, making its operations more sustainable.

Zoscales Partners is based in Addis Ababa, where its investment team is led by Co-Managing Partners Ashenafi Alemu and Jacop B. Renschler.

Source: Africa Capital Digest, 29 October 2018: http://africacapitaldigest.com/zoscales-makes-first-two-deals-for-maiden-fund/